Green Hydrogen’s Challenges and Opportunities: A Global Perspective
As the global energy landscape shifts towards sustainability, the role of green hydrogen has become increasingly critical. Yet, the industry’s growth is not without its hurdles. “The most important thing in our business is cost,” stated Garabedian, underscoring the challenges faced by companies involved in green hydrogen production. The real concern is not merely the cost of electrolyzers but the total cost of a fully installed plant.
Comparing costs across different manufacturers and completed green hydrogen facilities is complex, as highlighted by Pavel Molchanov, an energy analyst at Raymond James. This complexity reflects the nascent state of the industry. By the end of 2024, the world had approximately 2 gigawatts of hydrogen electrolyzers operational, a figure deemed “a rounding error” compared to fossil fuel-based hydrogen capacities, according to the International Energy Agency’s Global 2025 Hydrogen Review.
The market for electrolyzers is fraught with challenges. Despite an increase in global manufacturing capacity from over 10 gigawatts in 2022 to more than 50 gigawatts by 2025, the anticipated demand for green hydrogen has diminished. Molchanov notes this has resulted in “far more manufacturing capacity available than what’s getting deployed,” leading to many underutilized factories.
The repercussions of this imbalance are evident. Cummins, a major U.S. engine and generator manufacturer, recently announced the cessation of commercial activities for its electrolyzer division, which represents about 1 gigawatt of manufacturing capacity in the U.S. and Spain. Mark Smith, the company’s Chief Financial Officer, remarked that demand for electrolyzers has “dried up,” as reported in a November earnings call.
Garabedian acknowledged the situation, noting, “We definitely built the company for growth, and we’ve seen growth slower than we anticipated and hoped.” He anticipates another year and a half of subdued market activity.
In the U.S., the future of green hydrogen remains uncertain. The country’s abundant and inexpensive fossil gas supply renders green hydrogen roughly three times pricier than “gray hydrogen,” even with the 45V hydrogen tax credits set to expire next year. “No one in the U.S. is thinking about deep decarbonization these days,” Garabedian said. The economic conditions make it difficult for green hydrogen to compete.
In contrast, European markets present a different scenario. Higher gas prices in Europe make green hydrogen more economically viable, combined with stringent EU carbon reduction policies that drive demand for clean hydrogen. Molchanov pointed out that European gas prices are regularly three to four times higher than those in the U.S.
Consequently, projects like the HIF Global and Synergen in the U.S., to which Electric Hydrogen supplies electrolyzers, are primarily aimed at exporting products to Europe. This strategic focus explains Electric Hydrogen’s efforts to secure agreements in Europe, such as a collaboration with Germany’s Uniper for a 200-megawatt green hydrogen and ammonia plant expected to commence production in 2028.
Garabedian summed up the situation: “It is a complicated global market. And we, as an American supplier, have a strategy to address that.” This strategy involves relocating significant portions of their supply chain to Europe to align with European suppliers.
Original Story at www.canarymedia.com